) reported third quarter 2013 loss of 11 cents per share, wider
than the Zacks Consensus Estimate of a loss of 3 cents per share.
Revenues of $67.6 million were up 7.9% sequentially and 63.9%
from the year-ago quarter.
Revenues by End User
System on Chip (SoC) revenues in the third quarter amounted to
$31.7 million, an increase of $4.2 million or 15% from the prior
quarter. Overall strength in this market is currently being
driven by the shift from PC to mobile application processors
where probe card solutions are more complex and require higher
parallelism. The recent introduction of new models of smartphones
and tablets as well as the planned releases of new mobile
products and gaming platforms for the holiday season is also
The reported revenues for DRAM products were $28.8 million, an
increase of 8% or $2.1 million from the second quarter. Stronger
mobile DRAM demand drove the increase in the last quarter. During
the third quarter, the company experienced component delivery
delays and product issues that impacted deliveries to a DRAM
customer, which in turn impacted revenues for the quarter.
Flash revenues were $7.1 million for the third quarter, a
decrease of $1.4 million or 17% from the second quarter. NOR
Flash revenues decreased $3.3 million in the third quarter to
$1.9 million, while NAND Flash revenues increased $1.9 million to
$5.2 million in the quarter.
Third quarter reported gross profit was $12.5 million or 18.5% of
revenues compared to $8.2 million or 19.8% of revenues in the
year-ago quarter.. A disappointing non-GAAP gross margin resulted
from lower-than-forecasted manufacturing utilization in September
as a result of the significant drop in demand.
Operating expenses adjusted for restructuring, acquisition,
amortization and asset impairment charges came to $19.2 million,
up 1.2% from the year-ago quarter. As a result, the operating
margin improved from -26.3% to -9.9% during the year.
The pro forma net loss was $6.5 million (11 cents a share)
compared with a loss of $10.7 million (21 cents a share) in the
The company exited the quarter with cash and marketable
securities of $156.3 million versus $154.5 million in the prior
quarter. FormFactor has no debt. Long-term liabilities totaled
$10.3 million at quarter end, remaining flattish sequentially.
Cash generated from operations was $1.8 million in the third
quarter compared with $1.0 million in the prior quarter and cash
usage of $1.6 million in the third quarter of 2012.
For the fourth quarter, FormFactor expects revenues in the range
of $46.0−$50.0 million. Non-GAAP gross margin is expected to be
in the range of 10%-15%. Non-GAAP operating expenses are expected
to be $19.0-$20.0 million. Cash usage is expected to be in the
range of $12.0-$16.0 million.
FormFactor is an original equipment manufacturer (OEM) of
automated wafer probe cards used in the semiconductor integrated
circuits (ICs) manufacturing process.
However, with probe card demand exhibiting a downward trend, the
problem of under-utilization of factories is likely to persist,
which will further prevent the company from absorbing all of its
manufacturing costs. Strict cost control measures will be adopted
by management to bring the situation under control. Additionally,
management's recent decision to focus on the mobile segment is
likely to be beneficial.
FormFactor shares carry a Zacks Rank #2 (Buy). Other technology
stocks worth considering include
Cirrus Logic Inc
Freescale Semiconductor Ltd
), both with a Zacks Rank #1 (Strong Buy), and
Avago Tech Ltd Ord
) with a Zacks Rank # 2.
AVAGO TECHNOLOG (AVGO): Free Stock Analysis
CIRRUS LOGIC (CRUS): Free Stock Analysis
FORMFACTOR INC (FORM): Free Stock Analysis
FREESCALE SEMI (FSL): Free Stock Analysis
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